France Editorial Agencies Struggle To Reorganize

Posted on 3/10/2016 by Jim Pickerell | Printable Version | Comments (0)

    Correction: Lower down in this article, when initially published, I made a statement about Sipa Press not being profitable. This was in error and I apologize for this mis-information. Jocelyne Manfredi tells me that Sipa is profitable.
As revenues have declined in recent years due to declining sales for the use of images in print, and increasing use of images on the web at much lower prices, many French editorial agencies have found it necessary to reorganize. Jean Michel Psaila, CEO and owner of Abaca Press says, “The market has changed. We used to get €200 for print use. Now we get €5 for online use.”

One of the big problems with the French corporate structure is that it can be very difficult and costly to fire employees. Thus, when it comes time to downside and cut costs it can be very difficult if a significant part of costs are salaries. The French Tribunal de commerce (Commercial Court) for La procédure de sauvegarde (backup procedure) or redressement judiciaire (receivership) is designed to facilitate such reorganizations.

The Tribunal de commerce is for companies that are not insolvent, but facing difficulties in meeting their obligations that they cannot overcome, and which are likely to eventually lead the company to being unable to meet its current liabilities with available assets. The purpose of this safeguard procedure is to allow the continuation of the activity, the maintenance of employment and the settlement of liabilities, by undertaking a corporate reorganization under a plan approved by the tribunal.

This is similar to Chapter 11 bankruptcy proceedings in the U.S., but does not indicate that successful recovery is impossible. The reorganization process often takes 6 months to one year but never more than 18 months.

The Tribunal may freeze debts and schedule payments to creditors. Employees must be notified at least one month before dismissal and managers 3 months. During the period of reorganization public creditors (tax and social security authorities) may grant debt forgiveness. (For more information about this procedure see this link.)

Companies can go through such reorganization up to three times before being required to change the company name and Chief Executive Officer in order to continue business activity.

In Abaca’s case they entered into this process a year ago and are due to have their plan approved in 15 days. The goal is to structure the company so it can continue to operate and show a profit.

Abaca’s had 30 employees when they went into the restructuring. They will come out with 15 employees. After the reorganization some of the people who work for them will be freelance and work on a monthly guarantee. If, at any time the company decides they no longer need the freelance employee, they can terminate the agreement at the end of any month.

Gross annual revenue for Abaca is now about €4 million and their profits are about 10% of revenue. They currently have about 7 million images in their collection.

Jocelyne Manfredi, Foreign Editor of Sipa Press says her company went into receivership in December 2012. A new company came into existence some four months later. The company has continued in operation since then without going back into receivership.

Serge Corre says his company, Andia Agency, is under the control of the commercial court for 6 months while it develops a plan for reorganization.

Chris Delmas, of Visual Press Agency says that Visual is currently going through reorganization. “To make a long story short VISUAL had to ask for help from the French government to have the right to ‘fire’ some employees that became too costly and not necessary for the life of the agency.

Starface Photo, which syndicates Polaris in France, is another company in reorganization at the present time. After 6 months this company has not been able to present a plan to go out of the receivership procedure. The company is on Plan de cession (Disposal plan), which mean that they could close if they do not find any investors.

Things To Watch

One thing that tends to happen with some companies as revenue declines is that they delay paying royalties in order to have enough cash to cover salaries and overhead. If there isn’t a quick turnaround (which doesn’t seem to be happening in this case) the royalty obligation can get rather large quickly.

Companies have been known to withhold royalties from a few contributors who are owned the most in order to pay many who are owed relatively small sums in order to encourage them to continue to produce. In other cases, companies will pay their most productive contributors and withhold from the rest because they weren’t expecting much anyway.

I have no evidence that any of this is happening in any of these cases, but it is something to be aware of. The fact that a government agency is overseeing this process probably means that when a company is able to come out of reorganization a fair and transparent solution to move forward has been devised.

Copyright © 2016 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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